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Letters to the Editor, January 25, 2013

Several folks have asked for an address to send donations to the Chaplain’s Closet fund for Wounded Warriors at Landstuhl Regional Medical Center in Germany, where we recently visited and presented gifts from Block Island. Checks may be sent payable to:

We all know that Deepwater Wind has proposed three mainland cable alignments all of which have been withdrawn — revealing a lack of either concern for public opinion or expertise. And the scene has shifted to Scarborough State Beach.

Since Deepwater’s applications for easements before the State Properties Committee in December, it’s obvious they’ve adopted a strategy of requesting a string of permits, each involving narrow decisions. They clearly wish to avoid the big picture. Deepwater Resistance is very concerned with the big picture, among them the exorbitant rates for electricity approved by the Public Utilities Commission (PUC) in 2010.

To illustrate the negative socioeconomic impact, we’ve developed a financial snapshot of this proposal based solely on figures from the 2010 PUC docket 4185 and Deepwater’s 2012 Environmental Report. These figures are cumulative totals over the proposal’s 20 year life.

A) Total revenue: $866 million;

B) Capital investment: $183 million;

C) Operation and maintenance costs: $176 million;

D) Total gross profit: $507 million;

E) Excess costs paid by ratepayers: $595 million.

Item E is the extra cost all Rhode Islanders will pay above the anticipated future cost of electricity from all other sources (standard offer). If any of these figures or the basis for them is incorrect, as they may be since they’re two to four years old, we call on Deepwater to issue an updated set of projections. Residential and business ratepayers should view the excess costs as equivalent to an annual $30 million state mandated tax. The sole socioeconomic benefit is six permanent jobs.

In contrast to Deepwater’s rate of 24.4 to 46.9 cents per kWh, the PUC has under consideration a tentative Power Purchase Agreement (PPA) between Champlain Wind and National Grid RI for power generated in Maine using land-based turbines at a price of about nine cents per kWh, and not including any cost escalation factor. It’s a matter of public record that both Connecticut and Massachusetts are actively negotiating PPAs for terrestrial wind farms and solar generation at eight to nine cents per kWh.

At December’s Conference of New England Governors, in its closing policy statement, they endorsed the following alternative power sources: an upgraded regional grid, Canadian hydropower, solar, terrestrial wind, and natural gas. Significantly omitted from their list was offshore wind. During an interview Jan. 8 on Rhode Island Public Radio, Gov. Chafee announced his endorsement of that compact.

Deepwater’s scheme is much more than just a “demonstration” project. It should be considered a commercial scale project designed to provide exorbitant profits for Deepwater Wind and Wall Street’s DE Shaw. Together, they will walk away with a $507 million profit before taxes. No regulated public utility would ever be allowed such a similar coup. Hardly seems fair, right? Sen. Dawson Hodgson, candidate for Rhode Island Attorney General, recognizes the impact of this cost. Does the governor or the Legislature have the $595 million cost to ratepayers on their radar?

Deepwater should write a National Environmental Protection Agency-compliant Environmental Impact Statement (EIS) because, first, the venture is a private, for-profit company and second, it is not a minor project as evidenced by its $866 million anticipated revenue. In fact, this project is hyper-profitable when gauged by the profitability expected of electric utilities. In my entire career as a chemical engineer in private industry, no demonstration project I ever witnessed had revenue intentionally planned to exceed costs.

Deepwater should be required to renegotiate the rate structure to make it profit neutral and scale back the venture’s size. Simple arithmetic reveals that they would still make a small profit if their charge for electricity were reduced to $0.15 per kWh with a zero escalation factor. Remarkable! We invite the PUC to verify this estimate.

The turbine array should be downsized; Deepwater seems to have overlooked the fact that one 6 MW turbine at peak output would be more than sufficient to meet the island’s maximum demand. The cable’s capacity could be reduced to 12 MW, still twice peak demand, and the cable’s cost fully socialized. Now, that’s a demonstration project.

In the private sector, a contractor with a three-year record of three design failures would have been fired for incompetence long ago. It’s time for the state to remove the undersea cable totally from Deepwater’s responsibility and require National Grid to engineer and lay the cable. National Grid has the expertise to do it; Deepwater does not.